With higher prices for food and shelter offsetting a steep drop in gasoline prices, the Labor Department released a report on Thursday showing a modest increase in U.S. consumer prices in the month of January.
The Labor Department said its consumer price index inched up by 0.1 percent in January after rising by 0.2 percent in December. Economists had expected prices to increase by 0.2 percent.
The uptick in consumer prices was primarily due to an increase in shelter costs, which climbed by 0.4 percent in January.
Prices for food and for medical care services also rose during the month, more than offsetting a 1.6 percent nosedive in gasoline prices.
Reflecting the pullback in gas prices, which spiked by 3.1 percent in the previous month, energy prices slid by 0.7 percent in January after jumping by 1.6 percent in December.
Core consumer prices, which exclude food and energy prices, rose by 0.2 percent in January after ticking up by 0.1 percent in the previous month. The increase in core prices matched economist estimates.
Along with the higher prices for shelter and medical care, prices for apparel, recreation, education, and airline fares all increased in January.
Compared to the same month a year ago, consumer prices were up by 2.5 percent in January, reflecting the biggest annual increase since October of 2018.
The report said core consumer prices in January were up by 2.3 percent year-over-year, the same rate of growth as reported in the previous 3 months.
“With economic growth slowing, an ongoing lack of corporate pricing power and global deflationary pressures exerting downward force, inflation is poised to remain quiescent in 2020,” said a note from economists at Oxford Economics.
They added, “With inflation, as measured by the PCE price index, and growth likely to fall short of the Fed’s outlook, we foresee further monetary policy easing with another rate cut likely by midyear.”
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